The Next Threat to Your 401(k)

401(k) plans have been under assault from all quarters recently. Fears that the government might take away the tax benefits of saving for retirement through 401(k)s may be overblown, but last week, retirement investors got a sign that employers are once again looking at employee benefits as a place to cut costs -- to the detriment of their workers' financial futures.

Making a matchLast Friday, IBM made headlines by changing the way that it makes employer contributions to its workers' 401(k) plan accounts. Rather than allowing workers to invest matching funds at the same time as the employee contributions that the company is matching, IBM instead plans to wait until the end of the calendar year before adding the match to workers' accounts.

At first glance, that may not seem like such a big deal. After all, IBM's benefits are relatively generous, with matches and other employer contributions typically ranging from 6% to 10% of a worker's salary -- much more generous than many companies.

But workers are upset at two major implications from the move. First, getting a lump sum at the end of the year deprives workers of up to a year's worth of income and appreciation potential that they currently get when matching contributions are deposited with every paycheck. More important in many workers' eyes, IBM plans not to pay any matching contribution for an employee who leaves the company before mid-December. So theoretically, you could work for 11 months at IBM, quit, and get no match at all for that year -- a big hit compared to the 11 months' worth of matching you'd get under the old scheme.

Moreover, with IBM taking the lead, you need to be concerned that this idea will spread to other major employers. For employers that don't already offer good benefits, further reining in of costs through delayed matching contributions will represent a bigger slap in workers' faces.

Continuing the trendIBM's move is just the latest in a series of steps that employers have taken to reduce compensation expenses in the retirement benefits arena. During the 2008 and 2009 financial crisis, Ford , Oshkosh , and Weyerhaeuser were among the dozens of employers to temporarily suspend 401(k) matching, albeit restoring those benefits after their businesses had recovered. More recently, struggling grocer SUPERVALU ended 401(k) matching for its office workers effective the beginning of 2013.

In fact, IBM only switched away from its traditional pension four years ago, following the lead of many other companies in freezing existing pension benefits and replacing them with 401(k) plans. Yet back then, IBM got praise for its generous match and low-cost investing alternatives.

Of course, this isn't the first time that companies have implemented policies aimed at cutting costs and encouraging retention. Most 401(k) plans have rules under which employer matching contributions don't fully vest until you've worked for a company for three years. Leave before that, and you may forfeit every penny your employer has saved on your behalf.

In addition, bonus structures are aimed at keeping workers on at least through payout season. Some fortunate workers get prorated bonuses for partial years, but for most, sticking around until bonuses are paid before handing in a resignation letter is a time-honored tradition.

It's all in a day's workIn the end, workers need to understand that when employers like IBM make moves to cut their benefits, the net effect is falling compensation. In a tight job market, employers are holding all the cards, and most workers have little leverage in holding out for more pay. When a true recovery comes, though, the labor cycle will turn once more, and workers can once again negotiate from a position of strength in demanding better treatment from their employers.

Until that happens, IBM's new strategy marks a threat to your 401(k). It once again shows that if you truly want to defend yourself against hits to your retirement, your best plan is to save as much as you can on your own.

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